Other views: Student loan 'compromise' a bad deal

At a time when student loan debt tops $1 trillion and can be called a national economic crisis, the student loan "compromise" that passed the Senate, is likely to pass the House and is endorsed by President Barack Obama doesn't look like a good deal for students.

Through its inaction, Congress allowed the interest rate on subsidized Stafford loans, available to students from low- and moderate-income families, to double from 3.4 percent to 6.8 percent July 1.

Before and since then, Washington has been trying to come up with some kind of deal. What it has come up with is this: interest rates will be 3.9 percent for undergrads this fall, 5.4 percent for graduate students and 6.4 percent for students' parents.

But those rates will now be tied to the financial markets and are expected to rise, with a cap of 8.25 percent for undergrads, 9.5 percent for graduate students and 10.5 percent for parents.

And the Congressional Budget Office projects that the federal government will make a $185 billion profit on the deal over the next decade.

It's OK for the government to charge interest to recoup its costs in administering the student loan program, but it should in no way be making a profit off of it.

Just think about this for a minute. We want people to get college degrees. We want a college education to be as affordable as possible. We understand there will be student-loan debt, but we want people to be able to pay it off quickly and with as little burden as possible. The easier it is for people to pay off their student loans, the easier it will be for them to buy homes, cars and consumer goods; get married and start families. Those are all things that are vital to our nation's economy.

Congress' and the president's goal in this "compromise" should be to move closer to that scenario. Instead, this deal makes contending with student loans more difficult. That might make it a little easier for the federal government to cut its debt, but it certainly isn't going to help strengthen our financial picture.

She had initially pushed for a 0.75 percent interest rate for one year, the same rate that the Federal Reserve gives to large banks. This week, she offered an amendment that would maintain the 3.4 percent rate until a better solution could be worked out. The amendment failed.

It's important, as well, to note that these loans, for low- and moderate-income families only account for about a quarter of government-backed student loans. Most other loans are at interest rates higher than 6 percent. That's hard to stomach when considering how low interest rates are in other sectors.

There's a lot about the student loan system that needs to be fixed - the ability to refinance loans, consumer protections afforded to other borrowers and simpler and more flexible repayment options among them. And there's a lot about college costs that need to be fixed - tuition and fees have risen 1,120 percent in the last 35 years, almost twice as fast as even health care.

So this is one small but meaningful problem. And Washington's solution might be a solution for Washington, but it sure isn't for college students and their families.

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Other views: Student loan 'compromise' a bad deal

At a time when student loan debt tops $1 trillion and can be called a national economic crisis, the student loan 'compromise' that passed the Senate, is likely to pass the House and is endorsed by

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